Microfinance In Our Backyard

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A webinar with Grameen America and ACCION USA

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Microfinance In Our Backyard

  1. 1. Microfinance in Our Backyard <br />Hosted by Grameen America & ACCION USA<br />
  2. 2. The Need for Domestic Microfinance<br /><ul><li>1 in 7 or ~44 million people in the U.S. live in poverty (*28 million of these are women)
  3. 3. 20 million microenterprises in the United States, but less than 1% are receiving credit or business assistance
  4. 4. 400%-3,000% interest rates are charged by some alternative lenders, such as loan sharks and fringe banks</li></ul>“FY 2008 Program Performance Data Overview”. FIELD: Aspen Institute<br />
  5. 5. Impediments to Domestic Entrepreneurs<br />Loan amounts offered too big<br />Most banks issue loans averaging $194,000<br />There are 700 microenterprise programs in the U.S., 369 have a loan average of $35,000 <br />Poor credit history<br />Min. Required = mid 650s<br />Avg. = mid 750’s<br />Insufficient business history<br />Businesses are start-ups, off the books, initial phases<br />Group vs. Individual<br />Independent business culture<br />Looser ties to community<br />Gender Breakdown<br />Men primary owners of small businesses<br />Barrier to Entry<br />Start up and operational costs are much higher<br />
  6. 6. Grameen America’s Mission<br />To provide affordable microloans to financially empower low-income entrepreneurs:<br /><ul><li>Capitalto invest in a small business to create self-employment
  7. 7. Financial Literacy and education opportunities
  8. 8. Mentoringand strong support network to build communities
  9. 9. Access to Savings and a path toward establishing a credit history</li></li></ul><li>Grameen America Operational Overview<br />ProvideCapital<br /><ul><li> Low cost loans support income generating activity
  10. 10. Maximum first loan is $1500
  11. 11. 6 to 12 month terms
  12. 12. Lent out $17MM
  13. 13. 99% Repayment Rate</li></ul>Build Savings<br /><ul><li> Members open savings account with local bank
  14. 14. Minimum $2 per week savings encouraged
  15. 15. $750,000 deposited</li></ul>Establish Credit<br /><ul><li> Repayments reported to Experian
  16. 16. Many borrowers have no prior credit history
  17. 17. Building scores of > 640</li></ul>Develop<br />Financial Literacy<br /><ul><li> Borrowers participate in 5-day training, where</li></ul>they learn loan terms, open savings account & <br />develop business plan.<br /><ul><li> Weekly meetings foster financial education.
  18. 18. Minimum of 55 hours of training</li></li></ul><li>Grameen America Model<br />5<br />2<br />3<br />1<br /> 5 days<br />$<br />Complete training /<br />Start saving<br />Form group<br />4<br />NEW <br />LOAN<br />6-12 months <br />Repay loan<br />
  19. 19. Grameen America Borrowers<br />Live below the poverty line<br />Average income in 2009 was $15,000<br />90% single mothers<br />Interest and determination to start a business<br />Nowadays there are not many jobs out there so someway we need to survive. We’re making it and Grameen America has helped us do that. - Lisette, GA Borrower<br />
  20. 20. Facts about ACCION USA<br />History:<br />Pilot program in Brooklyn, New York in 1991 <br />Locations:<br />New York, Boston, Atlanta, Miami and Internet loans (serving over 46 States)<br />ACCION USAempowers entrepreneurs <br />to invest in their business, family and <br />community through financial literacy <br />and capital.<br />
  21. 21. ACCION USA Portfolio<br />65% Latino<br />20% African American<br />40% Women<br />
  22. 22. Client Snapshot<br /><ul><li> 87% are low-to-moderate income
  23. 23. 90% are minority
  24. 24. 75% have lived in U.S. over 10 years
  25. 25. 38% are home-based businesses
  26. 26. 45% are first-time borrowers</li></ul>20% African American<br />Source: 2009 Impact Study and ACCION USA Portfolio as of 12/31/2010<br />
  27. 27. Loan Process and Requirements<br /><ul><li>Credit score of 575 or more.
  28. 28. Have not have declared bankruptcy in the past 12 months or foreclosure in the past 24 months
  29. 29. Have not had any late rent or mortgage payments in the past 12 months
  30. 30. Be up-to-date on all bills
  31. 31. Exhibit steady cash flow and the ability to support monthly loan payments.
  32. 32. Be able to provide a cosigner, if needed</li></li></ul><li>ACCION USA Impact<br />The business survival rate among ACCION USA <br />clients is 98% for established businesses <br />and 89% for start-up businesses.<br />We create sustainable <br />businesses<br /><ul><li>Lent out $131MM
  33. 33. 92% repayment rate</li></ul>On average, each ACCION USA small business<br /> loan recipient creates 3 jobs <br />(including the borrower).<br />We create employment <br />in low-to moderate-income <br />communities<br /><ul><li>30,000 clients served</li></ul>Jobs created by ACCION USA borrowers<br /> pay 33% more ($10.80/hour) than the<br /> federal minimum wage ($7.25/hour).<br />We create fair wages<br /><ul><li>65, 000 jobs created</li></ul>We improve quality<br /> of life<br />Clients reported a 19% median increase in <br />take-home pay in the midst of economic distress.<br /><ul><li>46 states served</li></li></ul><li>Join us at Microfinance USA Conference May 23-24th in New York City! <br /><ul><li>Microentreprenur Client Tours – only a few spots spots left to see microfinance in action!
  34. 34. Social Entrepreneurship and Microfinance with Susan Davis and Jessica Jackley
  35. 35. Adam Davidson from NPR’s Planet Money
  36. 36. Student price $75, one-day tickets are now available for non-students. </li></ul> Register today at www.microfinanceusaconference.org<br />

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